Finance

What is the present value of $3,800 at 8.9 percent compounded monthly for five years.

Thurs far, I have P= ?/(1+i)n

(1 + 0.89/12)12*5
(1.0074167)60

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asked by Jill
  1. P = Po(1+r)^n

    P = $3,800

    r = (8.9%/12)/100% = 0.00742 = Monthly %
    rate expressed as a decimal.

    n = 12comp./yr. * 5yrs.=60 Compounding
    periods.

    P = Po(1+0.00742)^60 = 3800
    Po*(1.00742)^60 = 3800
    Po = 3800/(1.00742)^60 = $2438.65 =
    Present value.

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    posted by Henry

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